The Ministry was a membership-based event series that offered an informative and creative social environment for like-minded professionals to network and explore the enrichment of collecting and supporting the arts. The Ministry hosted 40 events between 2010 and 2012. It is currently on hiatus.

Case Study: Larry Gagosian – Real Estate Genius?

Larry Gagosian Buys and Sells Buildings the Same Way He Does Art: Behind Closed Doors. If he wasn’t dealing art, “I’d probably be in real estate.”

For five years, the Harkness Mansion lay vacant, a shell of its former record-setting self. Built in 1896 by shipping magnate Nathaniel McCready, it would change hands over the years among the city’s industrial elite. IBM president Thomas Watson bought the home in 1939 and sold it years later to the Harknesses, Standard Oil investors who also owned a mansion across the street. It was turned into a studio and school for the Harkness ballet company in the 1960s. In 1987, Jacqui Safra, the Swiss banking heir and Woody Allen investor, bought the rare, 50-foot-wide limestone mansion for $6.9 million. Two decades later, just as the real estate bubble was on the verge of bursting, private equity impresario J. Christopher Flowers dropped a staggering $53 million on the 20,000-square-foot home, the highest price ever for a residential property in the city.

Shortly after taking over the home, he began demolishing the interiors, preparing for a top-to-bottom gut renovation that would cost millions of dollars more. Instead, it was Mr. Flowers who got hit in the gut, when his wife asked for a divorce. For two years, the manse went wanting because buyers tend to prefer a move-in-ready home. “It was a black hole,” Mr. Flower’s broker, Brown Harris Stevens’s Sami Hassoumi, told The Observer last Thursday. “What I was showing wasn’t a house, it was a construction site. I had a temporary construction staircase that was scary. We had to wear hard hats.”

For most buyers, this would have been a nightmare. Not for Larry Gagosian, proprietor of the eponymous gallery empire, which is headquartered two short blocks away at 980 Madison. Not only does he pick up one of the most coveted properties in the city, but like the art he swaps on a regular basis, it was achieved through a deal that almost no one else could have expected or achieved. “They said they weren’t taking a penny less than $40 million,” broker A. Laurence Kaiser said. “And look what he got it for.”

Mr. Gagosian’s purchase of the home is in some ways no different from his approach at auction. He knows how to spot value, an opportunity. Witness his purchase, last November, of a 1980 painting by Roy Lichtenstein for $2 million at Christie’s. Mr. Gagosian stayed until the bitter end of the auction to pick up the picture—it did not have many other bidders. In his booth at the Art Basel fair in June, the painting was on offer for $5 million.

It would not be surprising for Mr. Gagosian to fix up the Harkness, give it his signature shine, and sell it for well more than Mr. Flowers paid in a decade or two. For that matter, consider Mr. Gagosian’s savvy purchase, in 1999, of the West 24th Street building that now houses his gallery there. He bought it from the Gambino family for $5.75 million. In 2007, it was estimated to be valued at around $40 million, with air rights.

In the meantime, the Harkness is so much more and so much less than a home to Mr. Gagosian. It is a would-be gallery, a statement of intentions, a way of life, just another deal on the way to countless more. A showcase, a showpiece, a show stopper. “He thinks of himself as a billionaire and wants the lifestyle of a billionaire,” said one collector who does business with Mr. Gagosian. He shuttles between his 11 worldwide galleries on his private jet; two years ago he had Christian Liaigre design a home for him in the ultimate billionaire vacation spot: Flamand’s Beach, on St. Barth’s. Now he has the Fifth Avenue mansion to go with all that.

For someone who grew up in a modest home in Los Angeles, Mr. Gagosian’s art has always been entwined with the buildings in which he shows it, perhaps more so than any other gallerist to come before him. Fifteen years ago, Mark Stevens, then the art critic for New York magazine, wrote an article describing the look of what he called “power galleries.” Mr. Gagosian told him, “I’m out there, I don’t hide. People say ‘high profile.’ I’m not doing it because I want to be high profile. That’s the tail wagging the dog. Somebody said, ‘Why don’t you live in a little house with an old car? Nobody will write about you.’ But I grew up in a little house with an old car.”

From Venice, Calif., to the Upper East Side, Soho to Chelsea, and around the globe, the lengths to which Larry Gagosian goes to present his art are unparalleled, and now he owns the ultimate stage. In buying the Harkness Mansion, Mr. Gagosian not only purchased a century-old limestone shell, he also purchased a regal facade, into which he can pour his architectural and artistic dreams.

Real estate is woven inextricably into Mr. Gagosian’s art world ascent. “If I weren’t doing this, I’d probably be in real estate,” he told then-Village Voice art critic Peter Schjeldahl in 1981. The New Yorker had come to L.A. to assess the local art scene, and in Mr. Gagosian’s gallery he found “the cold excitements of money.” An early profile observed that Mr. Gagosian “works in a manner more typical of real estate developers and movie executives.”

By this point, what is perhaps lost in the sands of time is the simple fact that Mr. Gagosian’s empire is built on a single, canny real estate move. In the early 1970s, when he was in his 20s, he spotted a vacant patio space in an old Spanish building in the center of Los Angeles’s Westwood Village. “It just struck me that that would be just prime real estate—why is it sitting there?” he said in an early interview. “So I found out who owned the building and I asked him whether I could rent this vacant courtyard for an arts-and-crafts kind of show there.” Mr. Gagosian, who was then selling posters, paid the first month’s rent of $75 with a loan from his mother. According to a 1972 article in the Los Angeles Times, he charged the 25 craftsmen manning the card tables that made up his Open Gallery—they sold things like purses and candles—$6 a day plus 10 percent of their gross.

Once an art dealer, he was no stranger to living with his work. Seven years before he rented the ground-floor space in artist Sandro Chia’s studio building on West 23rd Street in 1985, Mr. Gagosian briefly operated a private gallery in a loft at 421 West Broadway, in collaboration with the dealer Annina Nosei. Mr. Gagosian was spending most of his time at his gallery in Los Angeles then, but when in New York he continued to live in the loft even after he opened in Chelsea. (Mr. Gagosian has said he bought that loft in 1978 for $10,000 and a Brice Marden painting. Peter Marino did the renovations.)

In his native Los Angeles, Mr. Gagosian briefly ran a similar operation in the early 1980s. In addition to his gallery in West Hollywood, Mr. Gagosian held at least one exhibition in a building he built on Market Street in Venice, which also served as his Los Angeles home. In the late ’70s, before Venice gentrified, Mr. Gagosian pounced on a vacant lot there and hired the architectural firm Studio Works to create an innovative structure for him. In the late 1980s, it sold to Andy Summers, guitarist from rock band the Police, and on the occasion of L.A.’s bicentennial, it was designated one of the 200 most significant buildings of the past 200 years.

Craig Hodgetts, who ran Studio Works with Robert Mangurian, recalled the day Mr. Gagosian walked into the architects’ office on the Venice boardwalk. “We were on the beach and had a garage door we left open. This guy comes through the door, looks around the office, and says, ‘Are you guys architects? I just bought a property around the corner and I wonder if you would be interested in designing something.’” It was seemingly casual, but in hindsight, Mr. Hodgetts said, “I think he knew exactly what he was doing.” He must have known a bit about architecture, since he had been living in the Richard Neutra-designed Strathmore building in Westwood, in the same apartment Charles Eames once called home.

And then there is Toad Hall. The spectacular beach house in Amagansett was built for Francois de Menil by architect Charles Gwathmey in 1979, one of the postmodernists’ most celebrated homes. Mr. de Menil sold the home 12 years later, after “a lifestyle change.” It went on the market for $12 million, and while the price is not known, it was bought after a bidding war between Edgar Bronfman, Jr., who prevailed, and Mr. Gagosian. In the early 1990s, the newly divorced Mr. Bronfman bought a townhouse on East 73rd Street, and his broker, Roger Erickson, leafleted the neighborhood to promote his business. “I get so much junk mail from you,” Mr. Gagosian told him, according to a New York magazine profile of the broker. “But since you’ve bothered me again, I’ll ask you if Bronfman wants to sell his house in Amagansett.” Just like the Harkness deal with Mr. Flowers, it was a broken man in a broken economy. Mr. Gagosian got his beach house, and he only paid $8.15 million for it.

Mr. Gagosian mixes work and hearth to this day. On Oscars weekend this year, he installed an exhibition of artworks by Richard Prince at his new Holmby Hills home in L.A.—he had just purchased it for a cool $15.5 million the year before—and hosted a tony get-together there. According to The Wall Street Journal, members of his staff “mingled with guests, discreetly passing a rolled-up sheet of paper between them like a baton. The sheet listed prices for nearly every artwork in sight.”

Indeed, a similar air of showiness suffuses Mr. Gagosian’s current home—which he bought in 1988 from Schlumberger heiress Christophe de Menil—inside a converted stable at 147 East 69th Street. (The street has long been a haven for artistic types—Mark Rothko had and Jacob Collins has a studio down the block.) Pieces from his prodigious private collection hang on the walls, including Richard Prince, Andy Warhol, Cy Twombly, Damien Hirst, Roy Lichtenstein and countless contemporaries. Photos of a 2009 party there reveal guests swilling wine feet from multimillion-dollar paintings. Mr. Gagosian is said to have what may be Picasso’s last painting hanging over his bed.

While The Observer would never attempt to divine what goes on in Larry Gagosian’s head, based on discussions with real estate and art world experts, it is quite possible the Harkness Mansion could serve, in some capacity, as gallery, showroom, salon.

“The answer is, yes, it’s been done,” an attorney who specializes in zoning told The Observer. “It’s a residential district, which precludes any commercial use, but there is nothing stopping him from putting a gallery in the first few floors.”

The mansion’s cavernous 20,000 square feet could not be entirely given over to art, because the Department of Buildings still requires certain amenities for a residential building to get its certificate of occupancy. In this case, that includes a kitchen and at least one bedroom. The residences could occupy a few floors, or be nothing much more than a garret in the sixth-floor attic.

There are still further restrictions on a gallery conversion. There can be no separate entrances for the home and the gallery and no signage on the doors. Business hours are strictly forbidden—this is not a venue for public viewings. “But that doesn’t mean you couldn’t throw a party there every night if you wanted,” said the attorney.

The stately house would be a nice addition to the 11-gallery Gagosian empire, his most upscale space so far. Yet Mr. Gagosian would not want to go abandoning the mothership at 980 Madison, either. The biggest restriction of all is that no commercial activity could take place in the home. Even for the notoriously behind-closed-doors Mr. Gagosian, the convenience of going around the corner to sign over art would be essential.

Galleries in townhouses on quiet Upper East Side streets are nothing new. L&M; Arts operates one, as does Marianne Boesky. Unlike Mr. Gagosian’s new manse, both are partly zoned for commercial use. In Ms. Boesky’s case, it was a doctor’s office on the ground floor that was converted to a gallery in 1971, according to city records. Still, this did not keep her from staging the “dwelling” show in the spring, occupying every floor of the brownstone. Just because it’s a bedroom does not mean it cannot also become a gallery space.

Allan Stone lived over the shop on East 90th Street for 16 years until his death in 2006. The converted firehouse was sold this summer for $9.875 million and is reportedly being turned back into a single-family home. Richard Feigen’s gallery is located on the first few floors of his home, but any sales must be done off-site due to the aforementioned residential restrictions.

Perhaps the best known—if most notorious—example of a gallery inside an Upper East Side mansion was the $150,000-a-month 71st Street palace that another Larry once occupied. The disgraced Salander O’Reilly, at 22 East 71st Street, actually lay within a commercial district, making sales there legit. Well, legit from a zoning perspective.

Still, odds are this will be nothing more than a home for Mr. Gagosian, which is to say, of course, that it will be a gallery, as well, or more than a gallery, even. The thrill of buying off the gallerist’s walls is paramount, and at three times the size of Mr. Gagosian’s current home, oh, will there ever be a lot of wallspace. His current house is by all accounts stunning but has relatively small entertaining areas. A good portion of one floor is occupied by a lap pool.

While few of the mansion’s original details remain, the soaring, five-story atrium, which used to be an entrance for horse-drawn carriages, remains—big enough for a Serra or two. And it gives his stable of beloved architects plenty of space to play with. Like the 1,200-square-foot terrace looking across the avenue to the park, all of it perfect for entertaining.

And that is precisely the point.

The collector familiar with Mr. Gagosian insisted that the art on the dealer’s walls is his own collection and is not for sale. Yet it serves a purpose even more important than sales, as an example to the guests he entertains. This is how a megawealthy person can live, should live, must live—with great art. A visitor might think, I could live like this. If that visitor decided to do so, he or she would know where to go to buy such things.

“Is it anything a standard gallery person could do and get away with? Probably not,” said one source. “It’s not something Gavin Brown could or even would do. But Larry’s a word-of-mouth, private-client, private-banking kind of guy. It won’t be his gallery. It will be his salon.”

Or, it could just be his home. He is, after all, perhaps the only art dealer who has managed to attain the lifestyle of his billionaire clients. It is about time he started really living like one.